en.Wedoany.com Reported - The Commonwealth Scientific and Industrial Research Organisation (CSIRO) has recently developed an analytical method called FlexCost to quantify the costs required for demand-side resources to support the power system during periods of high demand or supply shortages. This method aims to compare the economics of managing electricity consumption to meet system needs versus simply building more supply infrastructure.
Recent significant volatility in global energy markets has highlighted the value of energy security, resilience, and cost control. In Australia, this volatility has translated into higher prices for emission-intensive coal and natural gas in the electricity market. While adding new renewable energy generation is crucial for long-term cost reduction, demand-side resources—including customer batteries, smart charging of electric vehicles, flexible appliance use, and energy efficiency improvements—are also key factors in lowering electricity bills.
In the past, decision-makers had limited understanding of the potential and costs of demand-side policies and investments, making it more difficult to design initiatives to reduce electricity prices. To address this, CSIRO collaborated with Energy Consumers Australia and consulted industry experts to develop the FlexCost framework. Dr. Chris Dunstan, the project director, noted that the method focuses on "constrained energy periods," when the power system is under stress due to a combination of factors such as peak demand, supply limitations, weather conditions, or outages. CSIRO's Chief Energy Economist, Paul Graham, stated that relatively few constrained periods can account for a large share of annual power system costs, and FlexCost provides clearer insight into when deploying demand-side resources is most cost-effective.
FlexCost research goes beyond traditional peak demand analysis. It recognizes that the nature of system constraints is changing, varying annually, by location, and by season, and is increasingly influenced by the interplay of renewable generation, legacy coal and gas assets, and extreme weather events. By analyzing the critical hours each year with the most severe constraints and highest electricity prices, the model aims to capture the high-cost impact of these short-term windows.
The framework supports practical decision-making in the electricity industry in multiple ways. For governments, it can guide policy design by identifying demand-side investments that yield the greatest system benefits and the most effective timing for incentives. For regulators and market bodies, it provides a basis for comparing demand-side options with traditional supply-side options, such as building new power stations. For retailers, network businesses, and energy service providers, it clarifies how to assess and deploy demand-side resources to reduce costs during constrained periods.
Electric vehicles, home batteries, and energy-efficient technologies are redefined by FlexCost as system resources with measurable economic value. As EV adoption accelerates, flexible charging technology allows vehicles to charge when supply is abundant, while vehicle-to-grid technology enables them to feed power back when the grid is under strain. Supported by government incentive programs, Australia has deployed over 500,000 home batteries, though participation in virtual power plants (VPPs) remains limited. Energy efficiency measures, such as improving building and equipment efficiency through insulation and more efficient air conditioners, can reduce overall annual demand and alleviate system pressure during extreme weather. Dunstan noted that space heating and cooling are key drivers of peak demand.
Australia's energy transition has traditionally been viewed as a supply-side challenge, but FlexCost's perspective emphasizes that as the power system becomes more distributed and increasingly reliant on rooftop solar and consumer batteries, the timing and location of electricity consumption become as important as the quantity of supply. CSIRO's power transition research already encompasses supply-side cost modeling through GenCost, national planning via the National Energy Analytics Centre (NEAC), and work on integrating consumer energy resources and enhancing building energy efficiency. Graham stated that improving the visibility of demand-side costs is crucial and should be strategically incorporated into planning alongside generation, storage, and networks. Lotte Wolff, Executive Manager of Advocacy and Policy at Energy Consumers Australia, said FlexCost demonstrates that specific technologies deployed in homes and businesses can support the power system at the lowest cost, thereby informing efforts to reduce overall energy bills for consumers.
As Australia's power system becomes more decentralized and flexible, a deep understanding of the costs and roles of demand-side resources will become increasingly important for managing system reliability and affordability during the transition to a highly renewable energy future.
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